Joint or Separate Accounts? That is the Question

It's already another year and Valentine's Day is around the corner again. So this year, I thought I would talk about “THE MERGE” of finances (or not).  A lot of questions about money arise when two people are living together as a couple under the same roof and sharing the same bills.  Personally, my hubby and I use of combination of the “separate” and “combined” strategies.  We each have our own RRSP and TFSA accounts through Questrade, as well as our own “play money” accounts (check out our recommendations for $0 basic online bank accounts) but we keep a joint Tangerine chequing account for combined expenses.  Basically what this means is that we each put in a matching amount of money every month and then all of our combined household expenses get automatically paid out of this pot.  It seemed fair from Day 1, and it has worked pretty well for us so far – but that doesn't necessarily mean that it's a one-size-fits-all solution.

The decision to keep separate accounts or have all the bills and paychecks going into one joint account is different depending on each couple's needs and wants.  Considering the fact that the major reason couples argue is all about money, this is a very important decision to make as a couple.  As a side note, I think it's interesting that the phrase “getting financially naked with your partner” is now becoming a thing.  I'm not sure exactly what it says about our modern society that we appear to be much more concerned and self-conscious about our money management skills than our *ahem* bedroom skills, but it's certainly a reality from what my circle of friends has experienced.

There are a lot of things to think about when deciding between one joint account or to have separate accounts – and of course the multitude of in between options.

Seeing as I haven't made a pros and cons list in a while, I thought I would make one to highlight the options in order to facilitate better decision making.

PROS of a Joint Account:

  • Joint or Separate Bank AccountsLess hassle (money comes in, money goes out from one account)
  • Less time needed to figure out the month to month expense tracking
  • Can be considered the “epitome” of a united cohesive relationship, the “what's mine is also yours” mentality and that is “our money” instead of “my money”
  • Less confusing
  • More egalitarian– if one spouse doesn't make as much as the other spouse, the lower income spouse will benefit
  • Will be easier to do taxes (I think…!)
  • If you have one credit card linked to it, then that's double the effort in collecting travel reward points
  • If one partner makes most of the credit related decisions, then they will never develop a good credit score (get your free Borrowell credit score)

 

CONS of a Joint Account:

  • There might be more squabbling about money– more decision making together about expenses.  I read somewhere that large proportion of spouses reportedly hide their big shopping items from their other spouse, so for this reason, one joint account might not be a good idea (unless you have EMT training)
  • You can't really surprise each other with gifts- all the expenses will be seen on credit card bills or with online banking
  • This is somewhat trivial, but gifts to each other will seem kind of weird because you're using the same pot of money
  • There might be some power-tripping if one spouse makes more than the other and contributes mostly to the joint account
  • The spending style of each individual in the couple has to be considered- if one is a spendthrift and the other is a tight wad, a lot of arguing and disagreements are guaranteed to ensue
  • If your partner is Spendy Mcspend, you run the risk of losing your share of the money (and then some) if they can't control their credit card spending
  • If all the money is put into one basket, it may be even harder to differentiate between money if you break up

PROS of a Joint Account in Conjunction with Separate Accounts

  • You can maintain your individuality– like if he wanted to buy that 55″ TV with his own money, it's not really my right to tell him not to (besides, nagging about money is not sexy)
  • Different spending styles can be maintained, as long as the money to pay bills as a couple is available
  • You can still maintain your credit score with your own account as a buffer
  • It can be a good first step before joining together for one account

CONS of a Joint Account in Conjunction with Separate Accounts

  • It can be a hassle to remember to deposit money from your own banking account to the joint account
  • Depending on your banking plan, you may rack up banking fees (like for email money transfers, or too many transactions) over time
  • Record keeping– so many accounts, so little time to keep track of them all
  • If you make less then them (e.g. on maternity or paternity leave, unemployed, going back to school) it may be hard to keep money flowing into the joint account

So considering all these factors, what should you decide to do?  The truth is that no online writer can tell you what sort of personalized solution will work best for you.  It really comes down to the personalities and beliefs that you and your partner have when it comes to looking at your wealth and earning capacity as a couple.  I don't think there is a right or a wrong answer.  Except for not talking about it at all – that's definitely the wrong answer!

I have a friend who had separate accounts with her boyfriend at first, and then they decided to cancel all the separate accounts and create one joint account (again, through Tangerine to get the $100 bonus) together for the above reason: one would forgot to put enough money for the mortgage payment, and the other would forget the next month.  It was too much of a hassle for them.  They also got married too. 🙂

Another option that might work well is to have one MAIN joint account where the paycheques come in and where the payments go out (so it will be hassle free), and then pay yourselves automatically a set amount into your own separate bank accounts each pay cheque or whatever is convenient.

Whatever the case, communication and set rule and guidelines are key…Making sure you have the same values and spending styles before you get together doesn't hurt too.

Readers, do you have joint or separate accounts with your partner/ spouse?  Which do you prefer and why?

52 Comments

  1. Jaymus (RealizedReturns) on February 9, 2011 at 7:58 am

    Joint. It’s simple. The con’s you’ve listed don’t seem too bad or can all be overcome in one way or another.

    Having separate accounts just seems like a layer of complexity with no benefits.



  2. Fox on February 9, 2011 at 8:24 am

    I agree with Jaymus!
    Joint, its simple. It’s all upfront. If we have seperate, there is too much to hide. I am just obligated to do my deposit in the joint, the rest is my own money. Well how’s that fair? If kids come tomorrow and we need to dish out $1500 for hockey? One might have the half, the other might not.

    The cons listed above and on my version of this, that I posted a few weeks ago, seem easy to over come.

    At the end of the day, if you have no communication, trust, you got no relationship. Might as well be everyone for them selves.



  3. SylviaLH on February 9, 2011 at 8:35 am

    Joint-Separate.

    We keep a “grocery” account which we both pay into equally. We set up the transfer so they are automatic, and it is a free account (we both bank with PC Financial), so we don’t pay any fees on it (or on any of our other accounts.

    It is also a way to transfer money between us (so if he lends me money, which he does sometimes because he works in a restaurant, I transfer the money back to him via the grocery account).



  4. Echo on February 9, 2011 at 8:49 am

    Can’t say one is better than the other, it’s a personal choice for sure. For us, we have one joint account. My wife is a stay-at-home-mom so we don’t have the two pay cheques to worry about.

    We discuss big ticket items together, but I’m not much of a spender on myself so it’s not a big deal to me (if she wants a new kitchen table, I’m not going to be holding out for a new electronic gizmo). I am a bit frugal and try to stick to our budget, which can be frustrating for her if she doesn’t feel like she has much control over the finances.

    You’re right about the “surprise” factor for gifts etc. To get around this problem (and the control issue above) I just take out cash every month for her to spend on whatever she wants, no questions asked from me.

    Just a hunch, this article will be in your top 10 most commented 🙂



  5. Financial Uproar on February 9, 2011 at 11:17 am

    This is one of those issues that comes down to trust.

    I have married friends who have a joint account, even though the husband is opposed to it. The reason? He feels his wife spends too much money. He doesn’t really trust her having full access to the money.

    I could never marry anybody who didn’t see money the same way I did. Once I’m confident she has similar spending habits as I do, having a joint account will be an easy choice.

    You know you’re a PFer when you’re attracted to girls who take care of their money.



  6. krantcents on February 9, 2011 at 11:47 am

    My theory is when you are considering cohabiting or marriage, there needs to be a discussion about money as well as other things. From that discussion, there has to be an agreement about finances or it will never work. Joint or separate is really less of an issue.



  7. Sustainable PF on February 9, 2011 at 11:57 am

    Joint and you maintain 1 separate credit card or bank account w/ a nominal amt of money in it (deposited yearly) for personal spending which includes gifts for the other person



  8. retirebyforty on February 9, 2011 at 3:50 pm

    We merged all our accounts a while after we got married. We don’t have any of the problems you listed above.
    We have cash allowance so each of us can buy what ever we want with that. We also use that for gifts.

    If you are not married, don’t merge your finance.



  9. My Own Advisor on February 9, 2011 at 3:05 pm

    Like Jaymus and others, joint, keep it simple. If you share everything else, I don’t understand why you wouldn’t share money. Just me.

    As Jaymus said “having separate accounts just seems like a layer of complexity with no benefits.”

    Make the move Y&T, you and the man can do it 🙂



  10. SavingMentor on February 9, 2011 at 6:01 pm

    Chalk me up as another person who uses the joint with a little bit of separate allowance for gifts to each other and personal luxury spending.

    The allowance amount isn’t very much, but it works pretty well. I can’t say we’ve never had fights about it in the past … but we rarely do these days. I think we would have fought the other way too, so I still prefer the joint method.



  11. Etienne on February 9, 2011 at 6:36 pm

    We use separate bank accounts, but shared credit card.
    We use Quicken to track all expenses and use a spreadsheet to split monthly buys according to the current ratio of salaries (e.g. currently it’s 60% for me, 40% for her)
    We use another spreadsheet to split large/long term buys according to a future fix split ratio once we both have permanent jobs. The vehicles, appliances, furniture and any other long term good are on this list so we can even out. Every month we pay the car but at different ratio depending on our job situation at the moment. But once we both have stable jobs, we will re-split every $ spend according to that “final” ratio. This means that if we bought the couch when I was paying 80% of the share, and the final ratio is 55%/45%, then she will owe me the different between what I paid at 80% and should’ve paid at 55%. It is fair for everyone and removes the variable of “when” we buy the big ticket items.
    It seems complicated and it is a little (until you start doing it routinely), but it’s the most fair way for both to enjoy life and save. We can go on vacation without one having to work 200hours for it when the other only works 100.



  12. Etienne on February 9, 2011 at 6:40 pm

    I need to add that I’m not married and I have personal debt to clear. It would not be fair to have a joint account when she has almost no debt. I did ny stuff before meeting her and she should nto be responsible – neither the joint account – for my debt.
    Probably that once we are debt-free we will simply merge everything and deposit our salaries in the same account, but for now, it’s much better this way.



  13. MoneyCone on February 9, 2011 at 7:07 pm

    We always kept our accounts separate. Never felt the need to combine them. (we have one joint mainly to facilitate money transfer but that account isn’t our primary account).

    Not that we don’t trust each other, never felt it was necessary to maintain trust! 🙂



  14. The Dividend Ninja on February 9, 2011 at 9:00 pm

    Well, I think its real simple. Keep them seperate! that will just save a lot of hassles and headaches.

    If you really need to, then just have a joint account for mortgage payments, etc.



  15. Miss T @ Prairie EcoThrifter on February 10, 2011 at 7:20 am

    My husband and I have joint accounts but we do have separate credit cards. This does help partly with being able to surprise each other with gifts. The issue is though that we track all of our spending in Quicken so we can see what each other charges. We haven’t totally figured out how to surprise each other yet. Right now, I just tell him to not look at that account until I say it’s ok.



  16. The Passive Income Earner on February 10, 2011 at 12:35 pm

    It really depends on what you have agreed about how you use the money. Joint / Separate is just a tool to use to handle the agreement about money.

    Is there a feeling that it’s YOUR personal money as opposed to OUR money? Is it separate because you feel entitled to spend it the way it pleases you?

    Once you decide to live together and make some steps forward, I believe that individuality has gone out the window and it’s now a couple matter and down the road a family matter if or when kids show up …

    With that said, I am the sole provider and I control it all, so I can’t really share a personal experience for deciding who pays what bill.



  17. serf on February 10, 2011 at 6:29 pm

    Separate accounts…The higher income earner pays all the bills…

    This allows the lower income earner to invest the savings and have the tax attributed to their income which is taxed at a lower rate.



  18. young on February 11, 2011 at 12:49 am

    @Jaymus, @Finance Fox- Thanks for your input and perspective. It’s not that there is no communication per se with separate finances, I would say there is more room for individuality (and possibly less argument). I mean, think about it this way, if your spouse continues to smoke a pack a day (that’s a $10 a day habit, people!) and you are nagging at him to quit because it is “our money” then that adds another dimension of tension to the relationship. I know that this is a terrible example, but one could argue that having 100% combined finances leaves more room for disagreement on what to do with that money. Obviously no one will agree 100% with each other on what to spend money on, I suppose there will be a large degree of compromise and open communication with 100% joint finances.



  19. young on February 11, 2011 at 12:51 am

    @SylviaLH- Sounds like a good system for both of you. That’s pretty much what my boyfriend and I are doing so far. Joint-separate, we have a “pool account” for the household expenses like mortgage, groceries, utilities etc.



  20. young on February 11, 2011 at 12:54 am

    @Echo- You’re right- it is definitely a personal choice. Everyone has different ways of what they would like to do with their money, and different ways of managing it. I would definitely not say that those who have joint-separate accounts are considered inferior to those with joint accounts only (in terms of “strength” of the relationship, if one would judge it by that even).

    I agree that if there is only one pay cheque then the joint account would be the better way to go. If the two paycheques were somewhat equal, or equitable, then I would personally prefer to keep it joint-separate. Given that what, 30% of couples lie to their spouse about what they bought? (hiding big ticket items etc.)

    Great tip on how to avoid the surprise factor issue with gifts- just take money out in cash, duh! 🙂 Good point!



  21. young on February 11, 2011 at 12:58 am

    @financial uproar- Excellent points! But what percentage of the population of eligible female singles take care of their money? (I know it might be higher than I am assuming, but from the small sample size of my friends and acquaintances, it doesn’t seem like a very high proportion… I started this blog because I had no girlfriends to talk to about money! lol)

    Money= symbolic of values. I agree that it will be very difficult to marry someone who doesn’t see money the way you do, but sometimes love is blind (until you see the credit card bill lol). My boyfriend and I have slightly different values even though we are both frugal. He for example, doesn’t mind spending money every day for lunch (that would drive the personal finance frugal side of me INSANE). On the other hand, he would not drop money like I do to travel.



  22. young on February 11, 2011 at 12:59 am

    @krantcents- always sage advice, krantcents 🙂 Definitely, relationships are about communication and discussing values.



  23. young on February 11, 2011 at 1:00 am

    @SPF- That sounds good- is that what you and Mrs. SPF do?



  24. young on February 11, 2011 at 1:02 am

    @My Own Advisor- lol, I’ll definitely consider joint 100% when we get married. But while we’re cohabitating, I think I”m going to see how it goes (and slowly see how much control I can exert over his finances LOL- I’ve been trying to see if I can get him to automatically save money into his TFSA… slow process but I think I am seeing results). He definitely sees personal finance different from me (he’s not as calculating as me)- though we are both frugal people.



  25. Little House on February 11, 2011 at 7:02 am

    My husband and I have had a joint account since before we were married. It was just easier to manage. Since we also have a couple of business accounts, we already have too many to manage (or I should say I have too many to manage.) And yes, I can see everything he does in the account – it’s like a map of where he’s been. 😉



  26. Big E on February 11, 2011 at 12:00 pm

    My wife and I use the last option, a joint account where everything comes in and out of, but we each have our own discretionary account were we each get the same amount each month to use however we want. That way the lower and higher income earners get the same amount of play money. It has worked really well for us.



  27. Finanzas Personales on February 11, 2011 at 4:06 pm

    I think the joint accounts and joint financial life in general should work out in a married couple. The basic money management rulas can be stablished in order to make this new financial life work… actually, a couple using a financial plan and with the right guidelines should have no problem in merging their financial life and might see the benefit of a consolidated position.



  28. young on February 12, 2011 at 12:10 am

    @Finanzas Personales- Thanks for visiting. What about debt? Would you want to merge finances with your partner when your partner is $50,000 in student loan or credit card debt? 🙂 Just food for thought.



  29. young on February 12, 2011 at 12:11 am

    @Big E- It really is all about the play money! 🙂 That sounds like a very feasible and workable option too. Have a joint account and take money out for your own stuff. Boyfriend and I might explore that plan later on, if we ever get fed up of transferring money into our joint account.



  30. young on February 12, 2011 at 12:15 am

    @Little House- men and their paper trails 😉 Well, it’s nice that he lets you manage the finances (I’m waiting for that day when my boyfriend will give me full control… mu hwa hwa hwa!)



  31. Etienne on February 12, 2011 at 8:30 am

    (I can’t seem to reply to specific comments). young: the debt is the reason we are keeping stuff separate and having a complex split of our expenses.
    I have debt she should not be paying for. I have higher income so I feel she should not pay half of everything day to day, etc.
    Once debt is repaid and everything is “common”, then joint account is probably the way to go.



  32. young on February 14, 2011 at 6:17 pm

    @Etienne- Thanks for clarifying and sharing your experience. That sounds like a very feasible and reasonable plan- pay off personal debt first, then join forces. 🙂



  33. Kevin@InvestItWisely on February 15, 2011 at 5:16 pm

    Definitely joint account for the shared expenses. We still have our own personal accounts, though!



  34. young on February 15, 2011 at 7:54 pm

    @Kevin@InvestitWisely- thanks for sharing your experience kevin! I think we have similar situations (recently purchased homes + not married) so I appreciate your perspective.



  35. Kevin@InvestItWisely on February 15, 2011 at 8:31 pm

    Oh, I have things setup pretty much the way you do, but I’m sure you’re able to automate the transfer. You might need to see them in person to set this up if it’s not available through online banking. That’s what we did — we summed up the mortgage payment and other bills and transfer that much every month automatically.



  36. young on February 15, 2011 at 10:43 pm

    @Kevin@InvestItWisely- Really? That would be awesome if I could. I asked someone at the branch if that was possible, and they said the only thing was to email money transfer it. though this was at the branch that I was taking money out of, not putting money in. It wouldn’t work from a big bank to another big bank.. is that the case for you?



  37. Kevin@InvestItWisely on February 19, 2011 at 8:35 am

    It does work. I went to the bank that I want to put money in and they asked for a void cheque from each of us. Then we told them how much we wanted to transfer per month. Adjusting the amount later was really easy, too!

    I’m with TD Bank if it helps any.



  38. young on February 20, 2011 at 11:50 am

    @Kevin@InvestitWisely- Okay I’m going to go to the bank and ask them, thanks! 🙂 My boyfriend is with TD Bank but I”m not. Perhaps TD Bank has better service?



  39. Helly on February 22, 2011 at 3:11 pm

    Well, in this day and age of modern technology and everything automated, the cons you listed for joint + separate accounts just aren’t as compelling anymore. My husband and I put the majority of our pay into a joint account, while a small portion goes into individual accounts for personal expenses– clothing, gifts, personal hobby pursuits. Our employer does the splitting for us– we give them the two bank account numbers and the specific amount to go into each account, and voila! Every paycheck automatically gets divided correctly. If our employer did not have this capability, it’s a cinch to set up an automatic transfer to/from our existing bank accounts every month.

    Banking fees are the bane of any consumer’s existence, and I feel it’s the consumer’s responsibility to be aware of them and adjust accordingly. When my individual bank decided to impose a minimum direct deposit amount to avoid fees, I simply switched to another bank. This would be true no matter what your situation– if you have a bank account, you have to be watchful for fees.

    Finally, record-keeping these days is made easier by many banks’ abilities to consolidate multiple accounts into one view– not just for external bank accounts, but brokerage accounts, as well. Very useful!

    I do agree that ultimately, no matter which route a couple picks, communication and similar values about money is the most important thing. Both my husband and I feel that this (majority) joint + (small allowance) individual gives us the flexibility and freedom to do our own thing yet at the same time maintain responsibility for general household interests. So it works for us, and we’re glad of that 🙂



  40. young on February 23, 2011 at 11:43 am

    @Helly- Thanks so much for input. Those are indeed compelling reasons to have a main joint account. I would indeed seriously think about it if we were to get married, but I think right now, to keep things simple, we are going to do it this way. But I agree with your perspective, when I was doing up the list, I did think that the “cons” didn’t seem like a very strong argument 🙂



  41. Helly on February 23, 2011 at 12:15 pm

    I also wanted to add that I think it’s wise to maintain the separate accounts while you’re not married. I hate to sound pessimistic, but without the property protections that marriage usually affords, I would think it easier to maintain what’s yours vs. what’s his in the event (heaven forbid) something were to happen. On that same “pessimism” vein– I think prenuptial agreements can be important to at least discuss, as well. Downer, maybe– but if you can’t honestly communicate about money, that, to me, signifies other underlying problems. Which all goes back to your assertion that communication is key 🙂

    As for the hassle of remembering to transfer– if it’s a set amount every time, will your bank let you set up automatic transfers? If not, I hear you on the hassle– I myself have to set up a calendar reminder for such regular transfers as paying credit card bills (where I want to be able to examine each statement before paying, in case there are any discrepancies to address first) — it pops up on my desktop, in my email, and on my phone. Nagware! 🙂



  42. young on February 23, 2011 at 11:54 pm

    @Helly- Thanks for adding that, Helly. I have a post about cohabitation agreements and being open about communicating with your partner about finances before you shack in. I still haven’t gotten to asking the bank- Kevin @Invest it Wisely said it should be possible, when I first asked them they said it wasn’t possible, but perhaps I need to ask the bank that is transferring money out.



  43. Rachael on March 14, 2011 at 8:22 pm

    Joint…yet seperate. What I mean is, my husband and I only have one checking/savings account through the same bank, but only my name is on the accounts. The reason why is my husband isn’t working, and hasn’t been for almost a year. Even before he was unemployed, I have always taken care of the finances. I make sure the bills are paid on time and the money is in the necessary accounts for different bills and expenses – that’s just my nature. Since he is unemployed, he can’t buy anything without getting the money from me first anyway. I have offered to put his name on the accounts but since he isn’t bringing any money in or spending any, he doesn’t cared and we are leaving it as it is for now. We had a joint account when we were first married, and the situations were reversed (he was working while I wasn’t) and I imagine once he is working again and needs somewhere to cash his paychecks or send direct deposit, we will have a joint account again. However, after having been through both sides of the spectrum, if that time comes, I would also like to set up individual accounts as well. I have found I’m particularly attached to my financial independence and having an account of my own gives me a semblance of that.



  44. Sarah on August 1, 2011 at 9:15 am

    Just hopped over here from your latest post.
    Hubby and I were married last year and merged our finances right before we were married. We have no problems listed above.

    It’s funny because I have had this conversation with many people and the thought of having separate accounts is just so foreign to us. Our parents both had joint accounts and I guess this is normal.

    I think it takes some adjusting.. I mean, I am the spender between the two of us, but now I am accountable to someone so I am ALOT more responsible. We have joint checking and emergency savings account.. but have our own investments.. all of which are taken from our checking accounts, where we are paid from. So we both see where things are coming and going, although don’t have access to eachother’s accounts.

    We have the moto “what’s mine is yours and what’s yours is mine.” and it works. We talk about big purchases and usually the other can argue why it’s a good one.. and well, if you can’t argue why, perhaps it’s not a good purchase.

    I don’t know.. joint account seems to work for us. 🙂



  45. young on August 2, 2011 at 11:35 pm

    @Sarah- I think that couples who share everything are strong- I think it takes a strong couple to be able to do that, to be able to communicate with each other and accept each other for their purchases with money. My parents had separate accounts and I guess it didn’t work for them because they got divorced, ha! I think it really depends on the couple 🙂



  46. Liza on February 22, 2014 at 9:05 am

    Hi,
    I was been reading all the comments here cause my fianc



  47. Kyle on February 22, 2014 at 9:26 pm

    I don’t think there is ever a one-size-fits-all answer to personal questions like this Liza. In my non-expert opinion if you trust him enough to say “I do” isn’t a few hundred bucks in a joint account pretty minor?



  48. Max on April 28, 2014 at 4:57 am

    It



  49. Mike on February 9, 2016 at 7:51 pm

    My partner and I are currently trying to decide what will be best for us. Separate accounts are definitely not working. It’s too much and confusing trying to remember to keep x amount of money in one xx in another account. The list really helped. Thanks



  50. Kyle on February 11, 2016 at 8:38 am

    Thanks for stopping by Mike. Glad to hear you got some good value.



  51. Amber on May 31, 2017 at 11:36 am

    My boyfriend and I are considering a joint checking account for the sake of convenience. We live together and think it would be easier to pay bills.

    I like the idea of getting our checks deposited into the joint account and then each getting an “allowance” or “play money” each pay period into our separate accounts (for example, he likes buying lunch, I like buying coffee). I’m wondering how that would work for us during the school year. I’m in nursing school and only work about one day a week because of my study schedule.

    Any thoughts on what would be the best way to go about this? Thanks!



  52. Kyle on June 4, 2017 at 7:41 pm

    I think as long as you both understand the setup going in, that should work fine Amber.



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